Public pension reform proposed in N.H. Senate

CONCORD — Senate Republicans are proposing raising the retirement age for public safety workers as one of the ways to shore up New Hampshire's public pension system.

NORMA LOVE

CONCORD — Senate Republicans are proposing raising the retirement age for public safety workers as one of the ways to shore up New Hampshire's public pension system.

Senate Republican Leader Jeb Bradley of Wolfeboro is the prime sponsor of pension reforms he said will stabilize the system in the long-term but will not spare employers' from rate hikes over the next few years. Bradley, other Senate Republicans, business leaders and local officials plan to discuss the proposal in detail today.

"Unfortunately, there is no short-term fix," Bradley said.

Bradley released some details Wednesday in an e-mail to constituents and The Associated Press. None of the proposed reforms would apply to workers with 10 or more years in the system, nor would they affect current retirees, he wrote.

Bradley said it is appropriate to ask beneficiaries with less than 10 years of service to help fix the pension system's large funding problem. Workers with more years of service are vested with an expectation similar to a contract that they will receive benefits, he said.

Retirees and vested workers would see little change if the reforms are enacted, he said.

"Given the enormity of the funding shortfall and the pending impact on property taxpayers, it is certainly appropriate to ask beneficiaries with less than 10 years of service to share in the potential solution," he wrote. "Not doing so accelerates the day of reckoning for the (New Hampshire Retirement System) and property taxpayers."

The New Hampshire Retirement System covers current and retired teachers, firefighters, police officers, and state and local government workers. The system gets money from three sources: worker contributions, employer contributions and investment returns. For years, employers' contributions to the system were too low, and that problem was compounded by a downturn in the stock market and projections that turned out to be wrong.

Lawmakers have worked for several years to shore up the system but some suggested reforms — such as what Bradley proposes — have met with resistance from employees and retirees.

The system covers 76,000 active and retired public employees.

Bradley's bill would raise the retirement age for police and firefighters from 45 to 50. And they would have to work five years longer to qualify for a pension.

Bradley also wants to prevent workers from using sick and vacation time and using career buyouts to boost benefits.

He would immediately end allowing police to add overtime from special details to their retirement benefit.

"Nobody will be able to retire and receive retirement benefits greater than their final salary," he wrote.

He said $90 million earmarked for higher benefits would be put into the fund to reduce the system's unfunded liability — pegged at 58.5 percent as of June 30. The system's assets were $4.9 billion on June 30 when fiscal year 2010 ended.

Bradley also would eliminate a 4 percent growth in medical subsidies provided to some retirees to offset the cost of their health coverage.

Newly hired workers would pay higher contribution rates under the bill. Police and firefighters would pay 11 percent instead of the 9.3 percent current workers pay. Other government workers would pay 7 percent instead of 5 percent.

Bradley proposes studying whether the public pension system should move from the current defined benefit system to a defined contribution system or 401(k) system used by the private sector.

He also said he would change the composition of the retirement system board to give employers equal say with employee members.

"These reforms are reasonable and pending an actuarial review should dramatically improve the unfunded liability of the system," he wrote.

During the past four years, changes have been made to shore up the fund, including raising employer rates. Lisa Shapiro, chairwoman of the system's board, said that given the poor economy, additional increases still could be needed.

Efforts to raise the retirement age won support from the House in recent years but police, firefighters and others affected by the change successfully lobbied the Senate to reject it.

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